Omega Engineering, Inc. v. Eastman Kodak Co.

Decision Date01 December 1995
Docket NumberCiv. No. 5:90CV00554 (PCD).
Citation908 F. Supp. 1084
PartiesOMEGA ENGINEERING, INC., Plaintiff, v. EASTMAN KODAK COMPANY, Defendant.
CourtU.S. District Court — District of Connecticut

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Joseph L. Clasen, David J. Burke, Robinson & Cole, Stamford, CT, Daniel J. Kelly, Robert A. Trevisani, William A. Zucker, Leigh A. Gilligan, Gadsby & Hannah, Boston, MA, James R. Fogarty, Epstein Fogarty Cohen & Selby, Greenwich, CT, W. James Cousins, McGowan & Cousins, Stamford, CT, for Omega Engineering, Inc.

Benjamin A. Solnit, George E. O'Brien, Jr., Christopher P. McCormack, Christine D. Marsching, Tyler, Cooper & Alcorn, New Haven, CT, Harold A. Kurland, Nixon, Hargrave, Devans & Doyle, Rochester, NY, Richard F. Orr, Office of the Speaker, Hartford, CT, for Eastman Kodak Co. and Ultra Technologies, Inc.

David E. Rosengren, Pepe & Hazard, Hartford, CT, for MIT Dev. Corp.

Chase T. Rogers, Cummings & Lockwood, Stamford, CT, for Price Waterhouse.

MEMORANDUM AND RULING ON MOTION FOR SUMMARY JUDGMENT

DORSEY, Chief Judge.

Defendant has filed a motion for summary judgment dated September 13, 1993, pertaining to counts I-VII and IX of the complaint.1 For the reasons below, the motion is granted in part and denied in part.

I. BACKGROUND

From 1987 to 1990, plaintiff Omega Engineering, Inc. ("Omega") purchased 9-volt lithium batteries with the brand name "Ultralife" from defendant Eastman Kodak Company ("Kodak") for inclusion with Omega's battery-powered products. In 1990, Kodak stopped manufacturing the Ultralife. Omega asserts several claims relating to the batteries' price, quality, safety, and discontinued production.

II. DISCUSSION2

Summary judgment avoids the delay and expense of trying claims for which a legally meritorious, factually indisputable defense exists. See Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). Summary judgment is proper if the evidence shows "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).

The initial burden is on the moving party to demonstrate the nonexistence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). This burden may be discharged by pointing out the absence of evidence to support the nonmoving party's case. Id. at 325, 106 S.Ct. at 2554.

"When the moving party has carried its burden ... its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The adverse party may not rest upon "mere allegations or denials," Fed.R.Civ.P. 56(e), but "must set forth specific facts showing that there is a genuine issue for trial." Id.; see also JSP Agency, Inc. v. Am. Sugar Refining Co., 752 F.2d 56, 59 (2d Cir.1985) ("Concrete particulars must be set forth in opposition to the motion.").

To defeat a properly supported motion for summary judgment, a factual issue must be both "genuine" and "material." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). A factual issue is not "genuine" unless "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248, 106 S.Ct. at 2510. A factual issue is not "material" unless it "might affect the outcome of the suit under the governing law." Id. In deciding whether there is a genuine issue of material fact, the court must draw all reasonable inferences in favor of the nonmoving party. Id. at 255, 106 S.Ct. at 2513-14.

A. Statute of Frauds

Count I alleges that Kodak breached a requirements contract to supply Omega with Ultralife batteries at a specified price. (See Third Am.Compl. (Jan. 13, 1995) ¶ 31.) This alleged contract is unenforceable, however, for failure to satisfy the statute of frauds.

The statute of frauds applies to contracts for the sale of goods for the price of $500 or more. See CONN.GEN.STAT. § 42a-2-201(1) (1993). The alleged contract is subject to the statute of frauds because, had it been carried out, the value of goods sold would have exceeded $500.3 See 3 SAMUEL WILLISTON, A TREATISE ON THE LAW OF CONTRACTS § 523, at 686-87 (Walter H.E. Jaeger ed., 3d ed. 1960) ("Where the contract is ... to sell a quantity of goods as yet undetermined at a total price to be fixed by the number ... of the goods ultimately sold ... the value of the goods for purposes of the statute of frauds ... depends on ... what the total amount or value of the goods would have been if the contract had been carried out....").

A contract subject to the statute of frauds generally is enforceable only if "there is some writing sufficient to indicate that a contract ... has been made ... and signed by the party against whom enforcement is sought...." CONN.GEN.STAT. § 42a-2-201(1). The writing must specify the quantity of goods to be sold. U.C.C. § 2-201 cmt. 1 (1977) ("The only term which must appear is the quantity term...."). For a requirements contract, the quantity to be specified is "a party's requirements." Eastern Dental Corp. v. Isaac Masel Co., 502 F.Supp. 1354, 1364 (E.D.Pa.1980).

No writing that might bind Kodak contains such a quantity term. Neither Omega's purchase orders nor Kodak's letters state that Kodak would supply Omega's Ultralife requirements for the indefinite future. Each purchase order calls for specific quantities of batteries on specific dates. (See App. to Def.'s Mot. for Summ.J. (Sept. 13, 1993) Exs. 1-11.) Each letter discusses these sales, and one "looks forward to a long term business relationship" based upon them. (See id. Ex. 21; see also id. Exs. 20, 22.) These writings suggest a series of separate, finite transactions — not an overall requirements contract of indefinite duration.

Omega cannot cure the lack of a written, requirements-related quantity term by reference to parol evidence of the parties' course of dealing, such as oral statements by Paul F. Dickinson, Kodak's director of market development. (See, e.g., Wakeman Aff. (Oct. 13, 1992) ¶ 15 ("Mr. Dickinson, on behalf of Kodak, stated that ... Kodak would agree to supply the Ultralife needs of Omega.").) "Where the writing relied upon to form the contract of sale is totally silent as to quantity, parol evidence cannot be used to supply the missing quantity term." Alaska Indep. Fishermen's Mktg. Ass'n v. New England Fish Co., 15 Wash.App. 154, 548 P.2d 348, 352 (1976); see also Ace Concrete Prods. Co. v. Charles J. Rogers Constr. Co., 69 Mich.App. 610, 245 N.W.2d 353, 356 (1976) ("The quantity term must appear on the confirmation without reference to parol evidence.").

Nor can Omega enforce the alleged requirements contract based on the parties' part performance thereof. UCC § 2-201(3)(c) merely permits a contract that does not satisfy the statute of frauds to be enforced "with respect to goods for which payment has been made and accepted or which have been received and accepted...." CONN.GEN.STAT. § 42a-2-201(3)(c); see also Manheimer v. Matzdorff, 28 U.C.C.Rep. 325, 327, 1980 WL 98445 (Conn.Super.1980) ("Partial payment satisfies the statute of frauds only as to that portion for which payment has been made and accepted."). The section does not permit enforcement of such a contract beyond what has already been performed. See Lippold v. Beanblossom, 23 Ill.App.3d 595, 319 N.E.2d 548, 549 (1974) ("Partial performance does not support a cause of action for anything over that already performed."); Artman v. Int'l Harvester Co., 355 F.Supp. 482, 485 (W.D.Pa. 1973) (Although affording buyers a remedy for goods accepted and paid for, section 2-201(3)(c) "does not indicate in any way that a delivery of goods shall bind two parties to a complex on-going franchise relationship."). Therefore, because the alleged requirements contract is unenforceable under the statute of frauds, Kodak is granted summary judgment on Omega's breach of contract claim in Count I.

B. Good Faith and Fair Dealing

Count II alleges Kodak breached its duty of good faith and fair dealing in conducting business with Omega. (See Third Am.Compl. (Jan. 13, 1995) ¶ 42.) Good faith and fair dealing are not independent requirements; instead, they arise from, and are dependent upon, the existence of an enforceable contract. See Cimino v. FirsTier Bank, 247 Neb. 797, 530 N.W.2d 606, 616 (1995) ("In order for the implied covenant of good faith and fair dealing to apply, there must be in existence a legally enforceable contractual agreement."); see also Verrastro v. Middlesex Ins. Co., 207 Conn. 179, 190, 540 A.2d 693, 699 (1988) ("The concept of good faith and fair dealing is `essentially ... a rule of construction....'" of existing contracts.) (quoting Magnan v. Anaconda Indus., 193 Conn. 558, 567, 479 A.2d 781, 786 (1984)); see also CONN.GEN.STAT. § 42a-1-203 (1993) ("Every contract or duty ... imposes an obligation of good faith in its performance or enforcement.") (emphasis added). Omega bases its good faith and fair dealing claim on the alleged requirements contract discussed above. (See Third Am.Compl. (Jan. 13, 1995) ¶ 37.) Because this contract is unenforceable, it is not a basis for applying the duty of good faith and fair dealing to the Ultralife transactions. Thus, Kodak is granted summary judgment on Count II.

C. Promissory Estoppel

Count III alleges that Kodak was bound under the doctrine of promissory estoppel to supply Omega's Ultralife requirements. (See Third Am.Compl. (Jan. 13, 1995) ¶¶ 45-48.) Kodak argues that its representations about supplying batteries were too ambiguous to support this claim: "A fundamental element of promissory estoppel ... is the existence of a clear and definite...

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